video transcript

There's something of a cloud hanging over China's previously booming economy. The nation's first interest rate cut since 2008 led some to expect things would be worse than anticipated. And they were right. Figures for May show falls in domestic prices, output and sales. Factory output rose 9.6 per cent on a year ago. That's less than expected and further heightens fears the world's second largest economy may slip into its worst downturn in a long time. Retail sales grew at their slowest since February 2011. And producer prices were down for the third straight month in a row, a drop of 1.4 per cent compared to the previous May. But there was better news on exports, up more than 15 per cent on the same time a year ago, more than double market expectations. Francis Lun, Managing Director of Lyncean Holdings, saying the news isn't all bad. SOUNDBITE: MANAGING DIRECTOR OF LYNCEAN HOLDINGS LTD. FRANCIS LUN SAYING (English): "The surprising thing is that the import and export figures are better than expected, and that really shows that the economy has much more intrinsic strength than people expected, so China will not experience a hard landing or decline." Despite May's boost, export growth is still well under the annual growth of more than 20 percent seen in 2010. And Chinese manufacturers face a double pinch of slackening global and domestic demand and rising labour and raw materials costs. Paul Chapman, Reuters